Deutsche Bank Posts Biggest Quarterly Loss in Four Years
Deutsche Bank posted its worst quarterly loss in at least four years after Europe's biggest bank said legal costs and restricting charges hammered the group's bottom line.
The lender slumped to a loss of €2.17bn for the three months ending in December, according to a statement published on its website. That compares to a profit of €147m for the same period last year. Group revenue for the quarter rose 14 percent to €7.9bn but the bank was forced to take a non-interest expense hit of €10bn over the three month period as it undergoes a major global restricting programme and boosts its capital base. A further €1.9bn charge was taken against the bank's so-called 'goodwill' value.
"This is the most comprehensive reconfiguration of Deutsche Bank in recent times," said co-Chairmen and CEOs Jürgen Fitschen and Anshu Jain in the statement. "We embarked upon the path of deliberate but sometimes uncomfortable change in order to deliver long term, sustainable success for the Bank. Simultaneously, we set the bank on course for fundamental cultural change. This journey will take years, not months."
Around €1bn was also set aside to cover potential legal costs associated with what the bank calls "adverse court rulings and developments in regulatory investigations".
Deutsche bank has been linked to the ongoing global investigation into libor manipulation. The bank's head of regulation, Stephan Leitner, appeared before a committee of German lawmakers in November of last year to testify in an investigation alleged rate-rigging but said "strict confidentiality" rules meant he could not give "specific details about the status of probes" into the banks.
Last month, UBS, Switzerland's biggest bank, paid a record $1.5bn fine to US, UK and Swiss authorities and admitted to one charge of wire fraud with the US Department of Justice in a settlement that the bank send will hit its fourth-quarter earnings when they're published on 5 February.
Europe's biggest lender announced a sweeping series of job cuts and strategy changes after a well-publicized earnings miss in July of last year which included plans to slash nearly 2,000 jobs and sell around 125bn in non-core assets. As part of that programme, around 1,400 of a planned 1,500 cull in the group's investment banking unit, which posted a pretax loss of €548m in the fourth quarter, have already been made, the bank said.
Deutsche bank's so-called tier one capital ratio, a measure of the amount of cash the bank needs to set aside to protect depositors and shareholders from potential losses, was 8 percent at the end of December. That's better than the 7.2 percent target the bank had set earlier last year but still short of the 8.5 percent level it hopes to achieve by the end of the first quarter
Deutsche Bank shares rose in Frankfurt in part because of a statement from CFO Stefan Krause, who told investors on a conference call that the bank will not need to issue new shares to comply with new US recapitalisation rules.
Shares in the lender were little changed on the day at €37.15 each after rising more than 2 percent in early trading.
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